Aspen Hospital Affected By Credit Crunch

The Aspen Times: Were the Aspen Valley Hospital District to sell bonds right now to finance its estimated $100 million expansion project, repayment would cost nearly twice as much as district officials had originally planned, an official confirmed last week.

Noting that economists are projecting the current recession will last well into 2010, hospital district Chief Financial Officer Terry Collins said the hospital isn’t eager to borrow money for an expansion in the current market.

“The bond market right now is not in good shape,” he said.

The hospital district typically could sell revenue bonds or general obligation bonds, two of the financing tools being considered for future bond issues, at between 3 and 4 percent interest rates, which would cost the hospital as much as $1.1 million per year, according to Collins.

But right now, he said, the best the hospital could expect is between 7 and 8 percent, which would mean as much as $2 million per year in interest payments, or nearly double what the hospital’s management has originally projected.

“So we wouldn’t want to go any time soon,” Collins said of the hospital’s plans to borrow money for the expansion.

The hospital has applied to the city of Aspen for permits to expand the 30-year-old facility’s size by 214,000 square feet from its existing 75,700 square feet, in order to meet changes in health-care technology and requirements as well as patient demands.

...With the understanding that the city’s review process could take months, Collins said the hospital’s management and board had originally and tentatively planned to “go to the market” with a bond issue no early than the end of 2009.

“I still wouldn’t count that out because a lot can happen between now and the end of the year,” he said. “I think it’s still too early to tell if we can stay on that schedule.”